The Future Is Now— A Delaware Corporation pays $52 million for Nebraska Land

In
2008, the Center for Rural Affairs and many other organizations tried to pass a
new corporate farming ban in the Nebraska legislature,
but we failed. Opposition to the bill was led by the Nebraska Farm Bureau.

We
spent a lot of time fighting for the corporate farming ban in the Nebraska
legislature, and we issued strong warnings on what could happen now that
Nebraska’s had disappeared. Unfortunately, we didn’t have any really good
concrete examples at the time. Now we do.

Here’s
what happens when you don’t have a corporate farming ban. From the North
Platte Bulletin:

A
corporation from Delaware recently paid $52
million for part of the largest farm in Lincoln County.

It was the most money paid in a one-time land
deal in Lincoln County in anyone’s memory.

The
sale could mark a milestone in the way farm business is conducted in Nebraska. For nearly 25
years, from 1982-2006, the Nebraska Constitution prevented such corporations
from owning any Nebraska
farm or ranch land.

This
is the future. There are all sorts of economic reasons for agricultural land
used in commodity production to transition to exactly this sort of ownership
model – a corporation formed solely for the purpose of owning land pays a farm
manager to run a farm on it.

Maybe
that’s not inherently evil, but it’s not the way small towns in the Upper Midwest were built and definitely not the way small
towns will survive, let alone thrive. Ownership of assets matters, and we’re
going to lose control of the most precious asset rural America has – land. And there’s a
lot of it involved in this particular transaction. Again, from the Bulletin:

According
to county records, the deal (which includes some ranchland) contained:

-
15,322 irrigated acres

-
3,690 grassland acres

-
108 dryland acres

-
53 acres of roads

-20
acres of farm out buildings

-
7 residences of one acre each.

Now,
a corporate farming ban does not prevent out-of-towners from buying up land.
And it does not prevent farms from getting really big. Obviously, the farm
above sold as a single tract, so it was already big. Other policy tools can
address those situations. The important thing here is the liability issue. Who
knows who owns this corporation, which was apparently set up solely for the
purpose of holding this land?

I
tried to look it up, but had no luck. The corporation, Lincoln Farm LLC, was
incorporated in Delaware
on Feb. 5, and bought the land on Feb. 20. According to the Bulletin, it is apparently investment
fund money, though the paper gives no details on why they are led to believe
that.

But
we do know the previous owner – Don Oppliger, a New Mexico cattle feeder and mega-farmer. I
don’t like him owning all that land, but at least we know who he was.
Ironically, this is the exact same piece of property purchased by Prudential in
the early 80s. That purchase ignited a firestorm of criticism that directly
contributed to the success of Initiative 300 (which Prudential spent a quarter
of a million dollars to defeat). Oppliger bought it from Prudential after I-300
passed, and now he’s selling to Lincoln Farm LLC less than two years after
I-300 was struck down.

If
Lincoln Farm LLC damages the environment or defrauds the community, there is
almost no recourse. If they build 10 mega-hog buildings on the land and end up
dumping millions of gallons of manure into local waterways, we know what will
happen. Nebraska Department of Environmental Quality will try to fine Lincoln
Farm LLC. But if that fine is for any truly substantial amount of money,
Lincoln Farm LLC will simply go bankrupt. And the people behind the money will
simply walk away.

Most
of the land involved is irrigated, and serious water supply issues face Nebraska. But will
Lincoln Farm LLC be motivated to contribute to a substantive dialogue over
water use and long-term solutions? And again, if Lincoln Farm LLC violated laws
governing irrigation, they can just walk away.

Or
if commodity prices go in the tank at some point all of Lincoln Farm LLC’s
suppliers will be out of luck if they decide to declare bankruptcy.

As
we like to say, limited liability really only means that liability is shifted –
in this case to other members of the community and taxpayers. Because they’re
the ones who will pay the price if Lincoln
Farms LLC fails to act responsibly. When that liability is shifted within the
community, that’s one thing – a family farm incorporating still has people
living in that community, and they will be held accountable by that community.

But
a bunch of investment funds? They couldn’t care less about the community. Their
only concern is profit. And even if they hire a farm manager who lives in the
community, his or her only concern will be profit too. If it isn’t, Lincoln
Farm LLC will find itself a new farm manager.

The
future is now. Bad government policy and low commodity prices equal farm
consolidation and concentration. Bad government policy and high commodity
prices equal faster consolidation and concentration. Unless something is done,
there will be more of these LLCs.

Contact: Dan Owens, dano@cfra.org
or 402.687.2103 x 1017 for more information on the Center’s plans to fight for
corporate farming restrictions in Nebraska.